Madhya Pradesh High Court
M/S Jaspal Singh @ Const. (A Registered ... vs Union Of India on 1 December, 2025
Author: Gurpal Singh Ahluwalia
Bench: G. S. Ahluwalia
NEUTRAL CITATION NO. 2025:MPHC-GWL:31937
1 AC-63-2023
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE G. S. AHLUWALIA
ON THE 1 st OF DECEMBER, 2025
ARBITRATION CASE No. 63 of 2023
M/S JASPAL SINGH @ CONST. (A REGISTERED PARTNERSHIP
FIRM) (FORMERLY KNOWN AS M/S JASPAL SINGH & CO.)
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Arun Dudawat, Advocate for the applicant.
Shri Praveen Kumar Newaskar, Dy. Solicitor General for
respondents/Union of India.
ORDER
This application under Section 11(6) of the Arbitration and Conciliation Act ( for short "the Act" ) has been filed for appointment of substituted arbitrator.
2. The undisputed facts are that there was an agreement between the parties. It is the case of applicant that original copy of agreement is with the respondent, therefore, the same could not be filed. The applicant submitted a letter to respondent on 21.03.2023 thereby invoking the arbitration clause. However, no action has been taken necessitating the filing of this application.
3. It is the case of applicant that respondent had floated a tender for Provn. Of Certain Technical Accommodation And Allied Services at Maharajpur, Gwalior. The work was allotted to the respondents vide letter of Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 2 AC-63-2023 acceptance dated 10.08.2006. Work order was also issued on 19.08.2006. Applicant completed the work on 30.07.2010, which is evident from the completion certificate issued by respondents on 05.08.2010. After several/multiple requests were made by applicant, deviation orders were issued by the department on 17.12.2019 and the respondents called upon the applicant to sign the final bill. Applicant, vide letters dated 09.06.2020, 22.8.2020 requested the respondents to include certain pending payments in final bill, and that the final bill signed by him be treated as under protest. Applicant, again wrote letter dated 07.09.2020 and requested for attaching his protest in the final bill. Ultimately, the payment of final bill was made by respondents after making certain deductions on 22.10.2020 and the said amount has been credited in the bank account of the applicant. Again, applicant vide letter dated 27.10.2020 requested the respondent for release of retention money lying with them. Pursuant to that, respondent No. 3 informed his superior authority that final bill has already been paid to the applicant on 27.10.2020. Now the respondents, taking aid of no-claim certificate, have denied the admissibility of the claims of applicant vide letter dated 10.03.2023. Accordingly, it is the case of applicant that denial of payment gives rise to dispute for the first time on 10.03.2023. As per the contract, competent Authority to appoint arbitrator vested with the Engineer- in-Chief. Therefore, applicant by invoking Clause 70 of IAFW 2249 requested the respondents to appoint sole arbitrator. However, respondents have not appointed sole arbitrator within a period of 30 days, therefore, the right of respondents to appoint sole arbitrator has stood extinguished, and Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 3 AC-63-2023 accordingly, applicant has approached this Court under Section 11 of the Act.
4. Respondents have filed their return and have claimed that the application filed under Section 11(6) of Act is barred by time. By referring to the final bill (Annexure R/1), it is submitted that on 16.05.2019 the applicant had certified that they had performed the work under the condition of the CA for which payment is claimed and that it has no further claim under this CE(AF)/MJR/14 of 2006-07 beyond the net amount of this bill. It is submitted that once this no-objection certificate has already been given by the applicant, then now it cannot be withdrawn. If the period of limitation is counted from 16.05.2019, then it is clear that the period of 3 years had expired on 15.05.202, whereas this application under Section 11 of the Act has been filed on 21.07.2023 and thus the application is barred by time.
5. Per contra, it is submitted by counsel for applicant that the cause of action arose for the first time when actual payment was made. The final bill was got signed by the respondent under compulsion because the petitioner would not have otherwise received his undisputed outstanding amount. The actual payment was made by respondents on 22.10.2020 and applicant had requested the respondents to appoint sole arbitrator by his letter dated 21.03.2023 and, therefore, filing of this application under Section 11(6) of the Act is within a period of 3 years from the date of cause of action i.e. 22.10.2020.
6. Considered the submissions made by counsel for the parties.
7. The Supreme Court in the case of BI General Insurance Co. Ltd. v.
Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 4 AC-63-2023 Krish Spg., (2024) 12 SCC 1 , has held as under:-
41. Having rejected the aforesaid two preliminary objections raised by the appellant, the question that now remains to be examined is whether, in the facts of the present case, the respondent could have invoked arbitration after having signed the consent letter dated 24-12-2018 and the advance discharge voucher dated 4-1-2019.
(i) Whether the execution of a discharge voucher towards the full and final settlement between the parties would operate as a bar to invoke arbitration?
42. A contract between parties can come to an end by the performance thereof by both the parties, that is, by the fulfilment of all the obligations in terms of the original contract. This is referred to as discharge by performance. Alternatively, the contract may also be discharged by substitution of certain new obligations in place of the obligations contained in the original contract, and subsequent performance of the substituted obligations. The substituted obligations are referred to as "accord" and the discharge of the substituted obligations is referred to as "satisfaction". It is referred to as discharge by "accord and satisfaction" or by "full and final settlement" in common parlance.
43. A written confirmation of discharge by "accord and satisfaction" can also be in the form of a full and final discharge voucher or a no-dues or a no-claims certificate issued by one of the parties acknowledging that there are no outstanding claims and that such a party has received the full and final payment to its satisfaction. In the insurance sector, the general practice is that the insurer obtains undated discharge vouchers from the insured in advance by making the insured to sign on dotted lines before processing the payment in respect of the claims of the insured.
44. The concept of discharge of a contract by "accord and satisfaction" is embodied in Section 63 of the Contract Act, 1872, which provides that the promisee may, inter alia, accept any substituted obligation in place of the original promise made to him, and such acceptance on the part of the promisee would amount to the discharge of the contract. Section 63 along with the illustrations is reproduced hereinbelow:
"63. Promisee may dispense with or remit performance of promisee.--Every promisee may dispense with or remit, wholly or in part, the performance of the promisee made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.
Illustrations
(a) A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.
(b ) A owes B 5000 rupees. A pays to B, and B accepts, in satisfaction of the whole debt, 2000 rupees paid at the time and place at which the 5000 rupees were payable. The whole debt is discharged.
Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 5 AC-63-2023
(c) A owes B 5000 rupees. C pays to B 1000 rupees, and B accepts them, in satisfaction of his claim on A. This payment is a discharge of the whole claim.
(d ) A owes B, under a contract, a sum of money, the amount of which has not been ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts, the sum of 2000 rupees. This is a discharge of the whole debt, whatever may be its amount.
(e) A owes B 2000 rupees, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a [composition] of eight annas in the rupee upon their respective demands. Payment to B of 1000 rupees is a discharge of B's demand."
(emphasis supplied)
45. The Privy Council in Payana Reena Saminathan v. Pana Lana Palaniappa [Payana Reena Saminathan v. Pana Lana Palaniappa, 1913 SCC OnLine PC 40 : (1913-14) 41 IA 142] defined the term "accord and satisfaction" as follows: (SCC OnLine PC) "... The "receipt" given by the appellants, and accepted by the respondent, and acted on by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the "receipt". It is a clear example of what used to be well known as common law pleading as "Accord and Satisfaction by a Substituted Agreement". No matter what were the respective rights of the parties inter se they are abandoned in consideration of the acceptance by all of a new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have in fact been exchanged for the new rights; and the new agreement becomes a new departure, and the rights of all the parties are fully represented by it."
(emphasis supplied)
46. As discussed in the preceding paragraphs, the appellant has contested that once a full and final settlement was arrived at between the parties, the insurance contract between the parties could be said to have been discharged. Once the contract stood discharged, it was not open to the respondent to resile from the settlement and invoke the arbitration clause, as no obligations remained to be fulfilled under the contract pursuant to the discharge of the contract. In other words, it is the contention of the appellant that as no arbitrable disputes remained after a full and final settlement was arrived at, there was nothing left to be referred to the arbitrator and hence the appointment of arbitrator being an exercise in futility, should not have been undertaken by the High Court.
47. To answer the aforesaid contention of the appellant, the question that needs to be considered is whether the "full and final settlement" of claims arising under a contract, is by itself sufficient to preclude any future arbitration in respect of such settled claims?
48. It is indeed so that once a contract has been fully performed, it Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 6 AC-63-2023 can be said to have been discharged by performance. Once the contract has been discharged by performance, neither any right to seek performance, nor any obligation to perform remains under it.
49. However, whether there has been a discharge of contract or not is a mixed question of law and fact, and if any dispute arises as to whether a contract has been discharged or not, such a dispute is arbitrable as per the mechanism prescribed under the arbitration agreement contained in the underlying contract.
.........
55. Thus, even if the contracting parties, in pursuance of a settlement, agree to discharge each other of any obligations arising under the contract, this does not ipso facto mean that the arbitration agreement too would come to an end, unless the parties expressly agree to do the same. The intention of the parties in discharging a contract by "accord and satisfaction" is to relieve each other of the existing or any new obligations under the contract. Such a discharge of obligations under the substantive contract cannot be construed to mean that the parties also intended to relieve each other of their obligation to settle any dispute pertaining to the original contract through arbitration.
56. Although ordinarily no arbitrable disputes may subsist after execution of a full and final settlement, yet any dispute pertaining to the full and final settlement itself, by necessary implication being a dispute arising out of or in relation to or under the substantive contract, would not be precluded from reference to arbitration as the arbitration agreement contained in the original contract continues to be in existence even after the parties have discharged the original contract by "accord and satisfaction".
57. The aforesaid position of law has also been consistently followed by this Court as is evident from many decisions. I n Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] , while rejecting the contention that the mere act of signing a "full and final discharge voucher" would act as a bar to arbitration, this Court held as follows: (SCC p. 291, para 44) "44. ... None of the three cases relied on by the appellant lay down a proposition that mere execution of a full and final settlement receipt or a discharge voucher is a bar to arbitration, even when the validity thereof is challenged by the claimant on the ground of fraud, coercion or undue influence. Nor do they lay down a proposition that even if the discharge of contract is not genuine or legal, the claims cannot be referred to arbitration."
58. Again, in R.L. Kalathia & Co. v. State of Gujarat [R.L. Kalathia & Co. v. State of Gujarat , (2011) 2 SCC 400 : (2011) 1 SCC (Civ) 451] , it was reiterated that the mere issuance of the no- dues certificate would not operate as a bar against the raising of genuine claims even after the date of issuance of such certificate. The relevant observations are extracted hereinbelow: (SCC p. 406, para 13) "13. From the above conclusions of this Court, the following Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 7 AC-63-2023 principles emerge:
(i) Merely because the contractor has issued "no-dues certificate", if there is an acceptable claim, the court cannot reject the same on the ground of issuance of "no-dues certificate".
(ii) Inasmuch as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such "no-claim certificate".
(iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party is able to establish that he is entitled to further amount for which he is having adequate materials, he is not barred from claiming such amount merely because of acceptance of the final bill by mentioning "without prejudice" or by issuing "no-dues certificate"."
(emphasis supplied)
59. The position that emerges from the aforesaid discussion is that there is no rule of an absolute kind which precludes arbitration in cases where a full and final settlement has been arrived at. I n Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] , discussing in the context of a case similar to the one at hand, wherein the discharge voucher was alleged to have been obtained on ground of coercion, it was observed that the discharge of a contract by full and final settlement by issuance of a discharge voucher or a no-dues certificate extends only to those vouchers or certificates which are validly and voluntarily executed. Thus, if the party said to have executed the discharge voucher or the no-dues certificate alleges that the execution was on account of fraud, coercion or undue influence exercised by the other party and is able to establish such an allegation, then the discharge of the contract by virtue of issuance of such a discharge voucher or no- dues certificate is rendered void and cannot be acted upon.
60. It was further held in Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] that the mere execution of a full and final settlement receipt or a discharge voucher would not by itself operate as a bar to arbitration when the validity of such a receipt or voucher is challenged by the claimant on the ground of fraud, coercion or undue influence. In other words, where the parties are not ad idem over accepting the execution of the no-claim certificate or the discharge voucher, such disputed discharge voucher may itself give rise to an arbitrable dispute.
.....
86. Speaking in the specific context of "limitation" and "accord and satisfaction", this Court in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] held that the procedural and factual disputes, like the Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 8 AC-63-2023 one in the present litigation, should be left for the arbitrator to decide, who in turn, would be guided by the facts as determined by him and the law applicable. However, while reiterating the position established in Mayavati Trading [Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714 : (2019) 4 SCC (Civ) 441] i.e. the principle of minimal interference at the stage of Section 11(6) petitions by Referral Courts in light of the introduction of Section 11(6-A) to the 1996 Act, this Court in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] carved out an exceptional category of cases in which interference by the Referral Court was permissible thus: (Vidya Drolia case [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , SCC p. 121, para 154) "154 . ... 154.1. Ratio of the decision in Patel Engg. [SBP & Co. v. Patel Engg. Ltd. , (2005) 8 SCC 618] on the scope of judicial review by the court while deciding an application under Section 8 or 11 of the Arbitration Act, post the amendments by Act 3 of 2016 (with retrospective effect from 23-10-2015) and even post the amendments vide Act 33 of 2019 (with effect from 9-8-2019), is no longer applicable.
154.2. Scope of judicial review and jurisdiction of the court under Sections 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.
154.3. The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence- competence, is that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non- arbitrability. The court has been conferred power of "second look" on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or (iv) of Section 34(2)(a) or sub- clause (i) of Section 34(2)(b ) of the Arbitration Act.
154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably "non- arbitrable" and to cut off the deadwood. The court by default would refer the matter when contentions relating to non- arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 9 AC-63-2023 alternative dispute resolution mechanism."
(emphasis supplied)
87. As is clear from the aforesaid extract, Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] held that although the Arbitral Tribunal is the preferred first authority to determine the questions pertaining to non- arbitrability, yet the Referral Court may exercise its limited jurisdiction to refuse reference to arbitration in cases which are ex facie frivolous and where it is certain that the disputes are non- arbitrable.
88. The decision of this Court in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] was subsequently relied upon by a two-Judge Bench of this Court in DLF Home Developers Ltd. v. Rajapura Homes (P) Ltd. [DLF Home Developers Ltd. v. Rajapura Homes (P) Ltd. , (2021) 16 SCC 743] wherein it was held that the prima facie review as laid down in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , in exceptional cases, warrants interference by the Court to protect the wastage of public money: (DLF Home Developers Ltd. case [DLF Home Developers Ltd. v. Rajapura Homes (P) Ltd. , (2021) 16 SCC 743] , SCC p. 755, para 21) "21. The jurisdiction of this Court under Section 11 is primarily to find out whether there exists a written agreement between the parties for resolution of disputes through arbitration and whether the aggrieved party has made out a prima facie arbitrable case. The limited jurisdiction, however, does not denude this Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood. A three-Judge Bench in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , SCC paras 236, 237, 244.3, 244.4, 244.5, 244.5.1-244.5.3, has eloquently clarified that this Court, with a view to prevent wastage of public and private resources, may conduct "prima facie review" at the stage of reference to weed out any frivolous or vexatious claims."
89. In BSNL v. Nortel Networks (India) (P) Ltd. [BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738 : (2021) 3 SCC (Civ) 352] , this Court explained the scope of primary examination regarding the aspect of non-arbitrability in the context of time- barred claims as laid down in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] thus:
(Nortel Networks case [BSNL v. Nortel Networks (India) (P) Ltd. , (2021) 5 SCC 738 : (2021) 3 SCC (Civ) 352] , SCC p. 764, para
45) "45. In a recent judgment delivered by a three-Judge Bench in Vidya Drolia v. Durga Trading Corpn. [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , on the scope of power under Sections 8 and 11, it has been held that the Court must undertake a primary first review to weed out "manifestly ex facie non-existent Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 10 AC-63-2023 and invalid arbitration agreements, or non-arbitrable disputes". The prima facie review at the reference stage is to cut the deadwood, where dismissal is barefaced and pellucid, and when on the facts and law, the litigation must stop at the first stage. Only when the Court is certain that no valid arbitration agreement exists, or that the subject-matter is not arbitrable, that reference may be refused.
45.1. ... While exercising jurisdiction under Section 11 as the judicial forum, the court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere "only" when it is "manifest" that the claims are ex facie time-barred and dead, or there is no subsisting dispute."
(emphasis supplied) .....
95. The position that emerges from the aforesaid discussion of law on the subject as undertaken by us can be summarised as follows:
95.1. There were two conflicting views which occupied the field under the Arbitration Act, 1940. While the decisions in Damodar Valley [Damodar Valley Corpn. v. K.K. Kar, (1974) 1 SCC 141] and Amar Nath [BHEL v. Amar Nath Bhan Prakash, (1982) 1 SCC 625] took the view that the disputes pertaining to "accord and satisfaction" should be left to the arbitrator to decide, the view taken in P.K. Ramaiah [P.K. Ramaiah & Co. v. NTPC, 1994 Supp (3) SCC 126] and Nathani Steels [Nathani Steels Ltd. v. Associated Constructions, 1995 Supp (3) SCC 324] was that once a "full and final settlement" is entered into between the parties, no arbitrable disputes subsist and therefore reference to arbitration must not be allowed.
95.2. Under the 1996 Act, the power under Section 11 was characterised as an administrative one as acknowledged in the decision in Konkan Railway [Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd., (2002) 2 SCC 388] and this continued till the decision of a seven-Judge Bench in SBP & Co. [SBP & Co. v. Patel Engg. Ltd. , (2005) 8 SCC 618] overruled it and significantly expanded the scope of judicial interference under Sections 8 and 11, respectively, of the 1996 Act. The decision in Jayesh Engg. [Jayesh Engg. Works v. New India Assurance Co. Ltd., (2000) 10 SCC 178] adopted this approach in the context of "accord and satisfaction" cases and held that the issue whether the contract had been fully worked out and whether payments had been made in full and final settlement of the claims are issues which should be left for the arbitrator to adjudicate upon. 95.3. The decision in SBP & Co. [SBP & Co. v. Patel Engg. Ltd. , (2005) 8 SCC 618] was applied in Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] and it was held by this Court that the Chief Justice or his designate, in exercise of the powers available to them under Section 11 of the 1996 Act, can either look into the Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 11 AC-63-2023 question of "accord and satisfaction" or leave it for the decision of the arbitrator. However, it also specified that in cases where the Chief Justice was satisfied that there was indeed "accord and satisfaction", he could reject the application for appointment of arbitrator. The prima facie standard of scrutiny was also expounded, stating that the party seeking arbitration would have to prima facie establish that there was fraud or coercion involved in the signing of the discharge certificate. The position elaborated i n Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] was adopted in a number of subsequent decisions, wherein it was held that a mere bald plea of fraud or coercion was not sufficient for a party to seek reference to arbitration and prima facie evidence for the same was required to be provided, even at the stage of the Section 11 petition.
95.4. The view taken by SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] was seen by the legislature as causing delays in the disposal of Section 11 petitions, and with a view to overcome the same, Section 11(6-A) was introduced in the 1996 Act to limit the scope of enquiry under Section 11 only to the extent of determining the "existence" of an arbitration agreement. This intention was acknowledged and given effect to by this Court in the decision in Duro Felguera [Duro Felguera, S.A. v. Gangavaram Port Ltd. , (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] wherein it was held that the enquiry under Section 11 only entailed an examination whether an arbitration agreement existed between the parties or not and "nothing more or nothing less".
95.5. Despite the introduction of Section 11(6-A) and the decision in Duro Felguera [Duro Felguera, S.A. v. Gangavaram Port Ltd. , (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] , there have been diverging views of this Court on whether the scope of the Referral Court under Section 11 of the 1996 Act includes the power to go into the question of "accord and satisfaction". In Antique Art [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 : (2019) 2 SCC (Civ) 785] it was held that unless some prima facie proof of duress or coercion is adduced by the claimant, there could not be a referral of the disputes to arbitration. This view, however, was overruled in Mayavati Trading [Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714 : (2019) 4 SCC (Civ) 441] which reiterated the view taken in Duro Felguera [Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] and held that post the 2015 Amendment to the 1996 Act, it was no more open to the Court while exercising its power under Section 11 of the 1996 Act to go into the question of whether "accord and satisfaction" had taken place.
95.6. The decision in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] although Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 12 AC-63-2023 adopted the view taken in Mayawati Trading [Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714 : (2019) 4 SCC (Civ) 441] yet it provided that in exceptional cases, where it was manifest that the claims were ex facie time-barred and deadwood, the Court could interfere and refuse reference to arbitration. Recently, this view in the context of "accord and satisfaction" was adopted in NTPC Ltd. v. SPML Infra Ltd. [NTPC Ltd. v. SPML Infra Ltd. , (2023) 9 SCC 385 : (2023) 4 SCC (Civ) 342] wherein the "eye of the needle" test was elaborated. It permits the Referral Court to reject arbitration in such exceptional cases where the plea of fraud or coercion appears to be ex facie frivolous and devoid of merit.
96. Thus, the position after the decisions in Mayawati Trading [Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714 : (2019) 4 SCC (Civ) 441] and Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 :
(2021) 1 SCC (Civ) 549] is that ordinarily, the Court while acting in exercise of its powers under Section 11 of the 1996 Act, will only look into the existence of the arbitration agreement and would refuse arbitration only as a demurrer when the claims are ex facie frivolous and non-arbitrable.
8. It has been further held by Supreme Court in the case of Krish SPG (supra) that while determining the issue of limitation in exercise of power under Section 11(6) of the Act, the referral Court should limit its inquiry to examining whether Section 11(6) application has been filed within the period of limitation of 3 years or not. The date of commencement of limitation period for this purpose shall have to be construed as per the decision in Arif Azim Company Limited vs. Aptech Limited, reported in 2024 (5) SCC 313.
9. The Supreme Court in the case of Arif Azim Company Limited (Supra), has held that mere failure to pay may not give rise to a cause of action, however, once the applicant has asserted its claim and the respondent has either denied such claim or failed to reply to it, the cause of action will arise after such denial or failure and the period of limitation would commence once a valid notice invoking arbitration has been sent by applicant to the other party and there has been a failure or refusal on the part Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 13 AC-63-2023 of that party. It has also been held that from plain reading of Section 11(6) of 1996 Act, which provides for appointment of arbitrators, no time limit has been prescribed for filing an application under the said section, however, Section 43 provides that the Limitation Act, 1963 would apply to arbitrations as it applies to proceedings in Court. Since none of the Articles in Schedule to the Limitation Act provide a time period for filing an application under Section 11(6) of 1996 Act, therefore it would be covered by Article 137 of Limitation Act which is the residual provision and, thus, the period of limitation for making an application under Section 11(6) is 3 years from the date when the right to apply accrues.
10. So far as the contention of counsel for respondent that on 16.05.2019, applicant had signed the final bill expressing no further claim, then he is estopped from raising additional claim, is concerned, the same is misconceived.
11. The Supreme Court in the case of R.L. Kalathia & Co. v. State of Gujarat, (2011) 2 SCC 400 has held as under:-
13. From the above conclusions of this Court, the following principles emerge:
(i) Merely because the contractor has issued "no-dues certificate", if there is an acceptable claim, the court cannot reject the same on the ground of issuance of "no-dues certificate".
(ii) Inasmuch as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such "no-claim certificate".
(iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party is able to establish that he is entitled to further amount for which he is having adequate materials, he is not barred from claiming such amount merely because of acceptance of the final bill by mentioning "without prejudice" or by issuing "no-dues Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937 14 AC-63-2023 certificate".
12. The principle of "Take it or go away" cannot be applied to frustrate the claim of the parties. Under these circumstances, the period of 3 years would not start running from date of signing of final bill, for the simple reason that even otherwise it is the case of the applicant that actual payment was made by the respondent on 22.10.2020. Once the applicant had already raised his additional claim much prior to payment of final amount, therefore, prior to 22.10.2020, the applicant must be under hope and belief that his additional claim shall be considered by the respondents. But once the final payment was made, then it was clear as noon day that the additional claim made by the applicant has not been accepted by respondent. Therefore, the cause of action would arise on 22.10.2020 i.e. when the final payment was made, and not on 16.05.2019 when the final bill was signed. Under these circumstances, the objection raised by respondent that this application under Section 11(6) of the Act is barred by time as it has been filed after a period of 3 years is concerned, the same is misconceived and it is hereby rejected.
13. Since the undisputed facts are that there is an agreement between the parties and a dispute has also arisen, therefore the matter is referred to the Arbitrator.
14. Accordingly, this case is finally disposed of with the following directions:-
(i) Arbitration case is referred to Madhya Pradesh Arbitration Centre (Domestic and International), Jabalpur (M.P.D.I.S.E.)
(ii) Shri Justice K.K.Trivedi, Former High Court Judge, R/o Block Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56 NEUTRAL CITATION NO. 2025:MPHC-GWL:31937
15 AC-63-2023 No.3, Vasundhara Vihar, Near St. Thomas School, South Civil Lines, Jabalpur (M.P.), e-mail - [email protected] is appointed as sole independent Arbitrator to resolve the dispute between the parties.
(iii) Director of Madhya Pradesh Arbitration Centre (Domestic and International), Jabalpur (M.P.D.I.S.E.) is directed to inform the said Arbitrator regarding his appointment and receive his consent. If said Arbitrator does not give his consent then matter may be referred to this Court for appointment of another Arbitrator.
(iv) Director in consultation with Arbitrator and parties shall fix date for arbitration.
(v) Arbitration case shall be carried out at Arbitration Center, Jabalpur (M.P.).
(vi) Parties are directed to deposit necessary charges and fees as per M.P. Arbitration Center (Domestic and International) Rules, 2019.
(vii) Other provisions of Section 15(3)(4) of the Arbitration and Conciliation Act, 1996 will apply to Substitute Arbitrator.
15. With aforesaid observations, this case is finally disposed of.
(G. S. AHLUWALIA) JUDGE (and) Signature Not Verified Signed by: ANAND SHRIVASTAVA Signing time: 10-12-2025 18:57:56